Indian hospitality post the pandemic has gone through an interesting evolution with today’s customers looking for options outside the traditional hotel. With the Indian government announcing removal of all travel restrictions on Monday with the scrapping of Air Suvidha form and PCR COVID-19 test, FinacialExpress.com spoke to Ramit Sethi of Seclude, one such player which is emerging as a pioneering leader in the “Branded Homestay and Boutique Property” ecosystem. Seclude has capitalized on this new trend and plans to aggressively expand this category. Currently operating 99 rooms across India, in iconic tourist destinations such as Uttarakhand, Himachal Pradesh, Goa, Kerala, among others, Seclude plans to scale its inventory to more than 500 rooms in the coming years. Excerpts:
Tell us a little bit about your background before Seclude.
My last stint was about five years with KPMG after which I wanted to venture into entrepreneurship. Earlier BPO’s in India were growing at a really fast pace in the early 2000’s and I joined the Infosys BPO team gradually becoming an expert in knowledge process outsourcing. I also had a stint in Wipro, aiding to set up offices in Poland and in China, I was in almost in charge of 5,000 direct recruitments and 20,000 people. By the time I was 49 I decided to align myself with startups and entrepreneurship and became an angel investor aiding to develop the US- India, Singapore- India corridor. I would invest, take part in the new age things which were happening and participate by being an active investor. And I developed the US-India corridor, Singapore-India. During the midst of all of this I met Rohit Sethi, who runs a management consultancy and has a passion for redesigning and up cycling iconic properties.
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How did the idea of running Seclude emerge?
Initially Rohit had purchased a property in Ramgarh, Uttarakhand, a three bedroom place. That’s the first official Seclude Homestay. Gradually there was one in Palampur, one in Goa, and one he was renovating in Mussourie. At the time the sum total of all the rooms would not have been more than 15 or 16. Rohit and I have a shared history and it’s a complete coincidence that our surnames are Sethi by the way. So he was persuading me to travel to the mountains to help me buy some property. At the time the company was being run in a small manner and we were in the home redesign and refurbishment business. While scouting I realized: Why spend two- three crores on one house? I proposed to Rohit we design a less capital intensive model. While scouting what we saw is that there were other people who had these beautiful properties in iconic locations. They badly needed somebody trustworthy who come redesign, manage the property and convert it into a revenue generating asset. So that’s exactly what we offered as a service. This clicked with a lot of people seemed to buy the idea immediately. So in Kasauli, we built up about five properties. We then put up in Lansdowne, and we were signing up quickly. And then we from the three rooms in Ramgarh, today we have 28 rooms. The model basically works as a long terms lease with various revenue sharing models. Once we onboard a new property there’s a complete redesign and upgrade which we manage completely with the aid of in house civil engineers and designers, end to end sales & marketing, operations, maintenance of the property when it goes live.
Tell us a little in terms of what are the benefits for property owners?
Once we’re handed over the location, we have the ability to do a complete redesign right up to civil engineer and architect level depending on the state of the premises and budget allocation. We then put the operations in place, automate for sales & marketing. From start to finish, we can get the property running in 45 days. So that’s a quick turnaround. For most properties we run our revenue shares with the landlords. A few are directly owned by us. In most cases it’s a 20:80 revenue split with 80% going to Seclude out of which all operational costs, including all maintenance, linen, cutlery, everyday operations is all borne by us. This is also why we demand a six year lease because to do it correctly, we need to do something more prominent and long term which benefits both the parties. This model has proved really successful, asset light to a large extent and very scalable. Our latest property opening will be in Nahan, HP, owned by the Royal Sirmur Family. It’s a testament to the success of the model and the trust property owners bestow upon us. That brings us to 99 rooms and we were targeting to close 2022 with 100 room inventory across India.
Did COVID in any way change your business model or perception of how you are running this business?
Yeah, actually it did us a good favor. What happened was that we quickly adjusted to say that we will offer privacy, longer stays and better isolation than any cramped 5 star hotel could. Pre- Covid, our properties were running at approximately 60% occupancy. We decided to try and achieve a higher occupancy 80-100%. How we did this was by doing some price calibration, offering long stay options to people and removing food inclusions. So we did a few changes our homestays. Homestays during COVID was actually one of the only categories that was actually performing. So we were able to run over 80 to 90% occupancy. So in that sense we were actually able to remain profitable even during COVID and that has allowed us to now pursue a more aggressive expansion plan of touching 500 rooms in the coming years.
You said that to get the occupancy during COVID you calibrated prices. Is it a long term strategy?
No, because that spoils the branding of the property and we have already driven some prices up due to pent up demand post COVID. We like to position ourselves as affordable luxury, so the pricing has to reflect accordingly. When you are offering luxuries, you are offering many amenities, facilities, which all come at a cost. For example we have installed projectors in the rooms of our Ramgarh, Cliff’s Edge property. However, having said that, is there an option to make our properties more affordable? Yes. We’re able to do that by focusing on other aspects during the design phase which are also more sustainable. We prioritize the use earth, mud, stone, steel, and we turn that into very rustic and chic objects, which are both really aesthetically pleasing and affordable. It’s the unique aesthetics and ambience, F&B, personalized service that you are creating which the guests are actually longing and ready to pay for. So what we are doing is that in the area of homestays, there is a lot of scope for a “Branded Homestays”, since that is more preferable option today versus the traditional hotels as long as the guest understands the level of service that is being offered.
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Do you offer experiences beyond the property?
Yes to a certain extent. It’s something we want to expand and explore. For example in a place like Landour, we arrange picnics and short hikes by the river. What we are working on now is developing a basic concierge services. This is what we feel is a natural progression considering the destinations we operate in and our offering. So if a guest decides to go to Kerala for example where we have 2 iconic properties not too far from each other, we want to be able to link them up, facilitate the air booking, taxis, making packages which incorporate wellness, stay at both properties, sightseeing, all in one so the guests only need to reach out to us as a one stop solution. So the packages we have made for Shimla because it has now air connectivity is that we create an itinerary in which we fly you to Shimla, experience the place, add a Kasauli stopover since we’re present there and then end the trip in Chandigarh. In this sense with the network of Homestays we are building the possibilities are endless and guests get to experience something which is quite different from anything else on offer today.
Now that you are into it, how do you see that the general hospitality industry has changed? Is there any trend you’ve witnessed?
I feel the trend is small boutique properties, which were considered unviable, like 13 rooms, 14 rooms. If you talk to a hotelier, they would say, you know, we need a minimum of 25-30 keys, otherwise they’re not viable. I think that’s the trend now that people who are choosing hotel stays, which is still a very valid way of traveling, have an option to choose a villa or boutique stay, which is not exactly competing. We don’t and can’t ever compete traditional hotel for example. We want to compete on the creation a completely different kind of holiday experience. Our competition is other villa home stays who are unbranded, who are running without consistency and standardized service. What they’re doing is, they’re not, in my view, trying to create a brand for one, and not involved in everyday operations. Some players are also just a sales & marketing for owners and somewhere along the line they deliver inconsistent experiences since they do not control all the aspects of running a property the way we do.
The Shimla property, you said is a heritage property?
Yes it is. We want to create this sub- category within Seclude. The Shimla, Taraview property is over 155 years old, which means it is older than the Viceroy Lodge, which is an iconic property. That’s only 130 years old. We got a real construction challenge of three and a half feet walls, mostly cement, no air, and a two story structure already made. Challenging but very exciting and the end result is appreciated by both the property owners and guests who visit. II was mentioning Nahan earlier which also a heritage property from 1933. The challenge in these cases we face how to renovate making it livable but also maintaining its originality and heritage. We try to keep the exterior structure closest to the original and focus more on the interiors. The design architecture part is as important as the aesthetic aspect. Obviously at every step of the way the owner is involved and interested, and their point of view is preservation of the property.
Are you also considering these offerings closer to major cities and do you have any plans to move towards MICE?
Location is key for us. We may consider farmhouses and stuff near Gurgaon, Manesar or something but they have to stand out. We don’t have a problem with that, but as they say it’s all about location location location! In these cases it will be more like weekend retreat concept away from hustle and bustle where we can also focus on event-based packages, like offsite, corporate retreats. In Kerela, we have 13 rooms, but we’ve got 2 weddings signed up. This is something we are working towards and combined with the concierge service we feel it’ll be a great offering which can really enhance our revenue prospects.
What are some typical price points you operate within?
Each property we sign up is completely different and unique compared to any other. Every property has its own pricing mechanism in which we also have to sometimes advise the owners if your property is not of a certain aesthetic, it has to compete with our other properties maybe in the same area. We do a detailed dive into the surrounding area and base our pricing with other locations which could have a comparable aesthetic. Pricing is linked to demand and seasonality but typically we are operating in the INR 6,000 – INR 15,000 per night range.